EV Battery Maker Predicts Supply Shortage

The current overcapacity to make batteries for hybrids and electric cars will swing to a shortage within three years as costs fall and demand grows, predicts LG Chem Ltd.

Prabhakar Patil, CEO of the company's LG Chem Power Inc. affiliate in the U.S., says lithium-ion battery costs, currently about $300 per kilowatt-hour, could be cut in half by 2018. He notes that costs have already dropped by a factor of 20 since the first such batteries were commercialized.

Patil declares that LG Chem will be the world's leading producer of lithium-ion batteries by 2016 despite plans by Tesla Motors Inc. to build a single battery plant that would more than double current world capacity. Patil says lithium supplies will not be an issue.

The South Korean chemical conglomerate currently makes lithium-ion batteries for the Chevrolet Volt extended-range hybrid and Ford Focus Electric small sedan. Earlier this month LG Chem announced plans to build a battery factory in China to supply that country's emerging EV market.

Late last year LG Chem began making lithium-ion cells for the Volt at its $304 million factory in Holland, Mich. The facility was designed for capacity to make enough cells to power 200,000 EVs per year. But its opening was delayed by lower-than-expected demand for the Volt.